Ras al Khair - Broadening economic horizons

Riyadh, November 12, 2012

By Rosamund de Sybel

Saudi Arabia, following its huge success in developing massive industrial cities in Jubail and Yanbu, is now building the third industrial cluster.

The Ras al Khair industrial city is expected to open up a new economic axis for the kingdom based on minerals, says Dr Alaa Nassif, the executive president of the Royal Commission at Yanbu, in an interview.

Excerpts from the interview:

How do the three cities [Jubail, Yanbu and Ras al Khair] fit into Saudi Arabia’s industrial strategy?

The three cities have been developed as hubs for industries, especially chemicals and petrochemicals. Now we’re moving with a new wave of industries into minerals. We are building our new city Ras al Khair and there are huge opportunities. We are building the infrastructure there, and, at the same time some of the industries have already started exporting.

There are also synergies between the three cities. Many products from the cities can generate industries that are needed in the kingdom. We are creating clusters, which develop products up to a final stage, so we can export them as finished products and utilise part [of the output] within the kingdom.

To what extent will these new industries generate employment?

In different areas and sectors, thousands of opportunities are being created. For example, the waterfront project in Yanbu – which is not industrial, but we see as important to complete the city’s development – will provide over 15,000 job opportunities alone. The other industries we are looking into in terms of clusters will provide another 50,000 jobs in the industrial sector. So it’s our target to provide job opportunities, and to boost industries which add value to the kingdom’s prosperity and to bring technology to our country. His Majesty King Abdullah was clear that industry is a vehicle for development.

What are the main challenges going forward?

The real challenge is time. But the government is providing all support needed to develop such mega scale projects. Worldwide, it is very hard to find a city that has been developed from scratch in 40 years to reach what we have today – the Royal Commission cities are producing almost 10 per cent of the Kingdom’s gross domestic product. And that is only over a course of 30 years of operation.

How do you see the cities’ share of GDP growing?

We have a very challenging target. His Highness Prince Saud bin Abdullah Bin Thunyan al Saud, the chairman of the Royal Commission, set a target that by 2020 our share of GDP should reach 20 per cent. That is a huge challenge, but we are working on it and hopefully we will reach it.

What is the investment split between the Royal Commission and private investors?

Usually, if we invest one dollar as the government, we get four to six dollars out of that investment from the private sector.

Are you seeing more interest from foreign investors in recent years?

We have lots of foreign investors. We are doing our best to simplify the process of investment and any international investor is able to get a licence from the kingdom to move in his own company with no need for a Saudi partner if he wants to work alone. We have a lot of international private sector investment in Jubail, Yanbu, and now Ras al Khair too.

When do you see nuclear energy coming on stream in the cities?

The King Abdullah City for Nuclear and Renewable Energy is developing an programme to start nuclear activity within the kingdom. This year, their programme was approved by the King, and from here onwards they are working on renewable energy.

Part [of the energy mix] will be nuclear and part renewable, such that we are concentrating in Yanbu now on solar energy. Within a year from today, you will see lots of movement in terms of renewable energy.

What percentage of the overall energy mix will nuclear account for, and in what time line?

To move into any new energy takes decades. Usually it takes 20 years to only replace 10 to 20 per cent of your existing use for regular energy. It’s a long-term project.

* The above interview appears in The Gulf magazine, a sister publication of TradeArabia.